MIAMI-South Florida’s office market continued its recovery in the third quarter, according to the latest statistics from Cushman & Wakefield. But much of the glut of space that flooded the market in early 2010 still sits empty even as the flight to quality from class B to class A buildings continues.
“We are seeing increased demand across the board,” Shane Soefker, senior managing director and branch manager of Cushman & Wakefield’s South Florida offices, tells GlobeSt.com. “There still is a game of musical chairs going on as tenants upgrade their space because they can get competitive deals from landlords, but we’re beginning to see some positive movement.”
The overall vacancy rate for Miami-Dade County fell to 18.1% at the end of the third quarter of 2010. That’s down slightly from 18.4% at the end of the previous quarter. Average rental rates decreased 3.8%—or $1.16 per square foot—from $30.93 at midyear 2010, ending the third quarter at $29.77 per square foot.
“We’re over the massive downsizing and adjustments by companies that have reorganized in the down economy,” Tony Puente, a senior vice president at Fairchild Partners in Miami, tells GlobeSt.com. “We are starting to see certain industries from the Northeast, especially out of New York, look at potentially opening new offices or expanding their presence in Miami. But it’s still a tenant’s market.”
Year-to-date leasing activity in Miami-Dade totaled nearly 1.7 million square feet, up 13.9% from the 1.5 million square feet leased at this time last year. Year-to-date overall absorption was positive 334,436 square feet, a 66% increase in absorption from negative 1 million square feet at this time last year.
“We are seeing a lot demand from the banking sector,” Soefker says. “We think we’ll see strong demand in 2011 across the board. The low rates and concessions may continue into the first or second quarter of 2011, but demand continues to pick up.”
Although the glut of space that hit Miami’s downtown market earlier this year offered an occupancy rate set back on top of an already poor economy, those same buildings will contribute to the long-term success of what some have dubbed Manhattan South. The infrastructure, including new commercial and residential buildings, is setting the stage for the live, work and play vision in Downtown Miami.
“The timing on a recovery is tricky,” Puente says. “Vacancies are still high and we need stronger absorption to swing the pendulum from a tenant’s market back to a landlord’s market. It’s going to take some time. I think 2011 will be much of the same as 2010 and then hopefully we’ll start seeing some real positive reports on the occupancy side.”
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